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International Financial Economics Corporate Decisions in Global Markets

by: O'Brien, Thomas J.

International Financial Economics Corporate Decisions in Global Markets

by: O'Brien, Thomas J.

ISBN 13:
9780195175042
ISBN 10:
0195175042
Edition: 2nd
Format: Hardcover
Copyright: 09/01/2005
Publisher: Oxford University Press

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Summary

"Completely updated and revised, the second edition of International Financial Economics: Corporate Decisions in Global Markets explains the principles of financial economics and applies them to discussions on the motives and reasoning behind corporate finance decisions in the international marketplace. International Financial Economics: Corporate Decisions in Global Markets is ideal for advanced undergraduate and graduate courses in global financial management."--BOOK JACKET.

Preface

PART I. FOREIGN EXCHANGE RATES

(98)

Introduction to Foreign Exchange

(21)

FX Rates

(3)

FX Rate Changes

(2)

FX Volatility and FX Exposure

(4)

Fundamental FX Supply and Demand

(1)

Interbank FX Market

(1)

Central Banks and Balance of Payments

(3)

Speculators

(1)

Triangular Arbitrage

(3)

FX Indexes

(4)

Foreign Exchange and Purchasing Power

(26)

Absolute Purchasing Power Parity (APPP)

(1)

FX Misvaluation

(1)

The Big Mac Index

(2)

OECD and APPP

(2)

FX Misvaluation and Trade Imbalances

(3)

Relative Purchasing Power Parity (RPPP)

(6)

Gold and FX Rates

(1)

The Bretton Woods System of Pegged Exchange Rates (1944--1973)

(3)

The Euro

(1)

Currency Boards and Dollarization

(1)

Trade Finance

(5)

Forward Foreign Exchange

(24)

Long and Short Forward FX Positions

(1)

Difference Check Settlement

(3)

Forward FX Contracts and Hedging FX Transaction Exposure

(3)

The Eurocurrency Market

(2)

Synthetic FX Forwards and Money Market Hedging

(4)

Mark-to-Market Value of a Forward FX Contract

(1)

FX Swaps and Futures

(1)

PERLs

(7)

Foreign Exchange and Interest Rates

(25)

Covered Interest Arbitrage

(1)

Covered Interest Rate Parity (CIRP)

(4)

CIRP in Percentage Form

(1)

Uncovered Interest Rate Parity (UIRP)

(3)

Interest Rate Changes and FX Rates

(5)

FX Forecasting

(1)

Siegel's Paradox

(2)

Siegel's Paradox and Forward versus Expected FX Rates

(7)

PART II. LONG-TERM FOREIGN EXCHANGE EXPOSURE

(94)

Foreign Exchange Operating Exposure

101

(24)

FX Operating Exposure

101

(5)

FX Operating Exposure of a Foreign Subsidiary

106

(3)

FX Revenue and Cost Exposures and FX Pass-Through

109

(4)

Operational Hedging and Operating Leverage

113

(2)

Theoretical Estimation of FX Operating Exposure

115

(3)

Regression Estimation of FX Exposure

118

(7)

Debt and Foreign Exchange Exposure

125

(25)

Should Firms Manage FX Exposure?

126

(3)

Debt Denominated in Foreign Currencies: Eurobonds

129

(1)

Debt and FX Net Cash Flow Exposures

130

(3)

FX Value Exposure

133

(3)

FX Equity Exposure

136

(3)

Hedging FX Equity Exposure with Foreign Currency Debt

139

(3)

FX Net Cash Flow Exposure versus FX Equity Exposure

142

(1)

Debt Maturity

143

(1)

Estimation of FX Equity Exposure

144

(2)

Unlevering Estimated FX Equity Exposure

146

(4)

Currency Swaps

150

(23)

World Bank-IBM Swap

151

(1)

Fixed-for-Fixed Currency Swaps

152

(2)

Parallel Loans and Back-to-Back Loans

154

(2)

Swap-Driven Financing

156

(2)

Settlement of Swap Components with Difference Checks

158

(2)

Mark-to-Mark Valuation of Currency Swaps

160

(2)

Off-Market Swaps

162

(1)

Currency Swaps and FX Equity Exposure

163

(2)

Managing FX Equity Exposure with Currency Swaps

165

(3)

Unlevering Estimated FX Equity Exposure

168

(5)

Economic Foreign Exchange Exposure

173

(20)

Economics of Foreign Exchange, Price, and Volume

174

(5)

Compound FX Revenue Exposure

179

(4)

Competitive FX Revenue Exposure

183

(4)

FX Revenue Exposure: Domestic Firm with a Foreign Competitor

187

(1)

FX Operating Exposure of a Foreign Subsidiary with a Foreign Competitor

188

(5)

PART III. COST OF CAPITAL AND CROSS-BORDER INVESTMENT DECISIONS

193

(105)

Global Finance and the Cost of Capital

195

(25)

Returns on Foreign Assets

196

(2)

Depositary Receipts

198

(3)

Cost of Capital

201

(1)

The Capital Asset Pricing Model

202

(3)

Global Equity Beta and the Cost of Equity

205

(4)

Risk-Free Rate

209

(1)

Cost of Debt and the WACC

210

(3)

Systematic FX Risk

213

(1)

Risk-Adjusted Uncovered Interest Rate Parity

214

(6)

Cost of Capital for Overseas Investments

220

(25)

Operating Risk Approach

221

(1)

Accounting Beta Method

222

(1)

Country Beta Method

223

(2)

Emerging Market Investments

225

(4)

Cost of Capital in a Foreign Currency

229

(3)

Unlevering Equity Betas: Basic Case

232

(1)

WACC and Operating Risk

232

(1)

Unlevering Equity Betas: General Case

233

(1)

Pure Play Proxy Method

234

(1)

FX Exposure and Beta

235

(3)

Risk and return in Non-US Dollar Currencies

238

(7)

Accounting for Foreign Investments and Hedging

245

(30)

FX Translation and SFAS 52

246

(5)

Hedging and SFAS 133

251

(4)

Cash Flow Hedges

255

(5)

Net Investment Hedges

260

(6)

FX Value Exposure vs FX Accounting Exposure

266

(9)

Overseas Investment Decisions

275

(23)

Overseas Acquisition

277

(3)

Production Relocation

280

(2)

Foreign Currency Perspective

282

(2)

Interpreting NPVs of the Currency Perspectives

284

(1)

Equilibrium NPV or Home Currency NPV

285

(2)

Impact of Hedging and Financing Decisions

287

(2)

Expansion of Overseas Capacity

289

(1)

Forecasts of Corrections of FX Misvaluation

290

(2)

Asset Values and Correction of FX Misvaluation

292

(6)

Index

298

Amazon no longer offers textbook rentals. We do!

International Financial Economics Corporate Decisions in Global Markets

International Financial Economics Corporate Decisions in Global Markets

9780195175042

0195175042

Summary

Author Biography

Table of Contents

Supplemental Materials

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